Last night Microsoft announced that it had changed some of its policies around its forthcoming Xbox One game console that had generated considerable ire in the game console community. Most notably, Microsoft eliminated the requirement that the console be always connected to the Internet. That requirement and other “features” had created great fear in the gaming community that Microsoft was going to quash the secondary market for its console games, requiring users to buy new games and prohibiting them from sharing their games among friends. I won’t get into the details of what they announced and what changed here — you can Google that — but it’s shocking that Microsoft could get something so terribly wrong that they had to reverse course in less than a week. Let’s examine possible scenarios:

Microsoft could have really believed this was a good move. We’re moving towards an always-on environment and Microsoft is not alone in that belief. Just the other week Adobe announced that it would no longer sell packaged versions of its Creative Suite, selling it only by subscription online. If this is the case, Microsoft somehow managed to miss a few things. First off, the use profile of a game console is different than the use profile of a high-end business-oriented software suite. Adobe’s move in no way was a watershed moment. It was an early move but this vision is not yet universal and so Microsoft’s forcing it early was not well received. Moreover, if this was their goal, their value proposition for it was, shall we say, lacking. “Hey, in an always on environment we can deliver you all these neat capabilities. The first ones require you to use our heretofore optional paid online service and we’re also going to regulate if not eliminate your ability to share and sell games but hey, this is the future.”

Microsoft was trumped by Sony. After Microsoft’s announcement, Sony announced details around their PS4. PS4 is $100 cheaper and had none of those draconian features that Microsoft proposed. If Microsoft thought Sony was going to follow their lead, they were badly wrong. Sony not only offered a solution that had none of Microsoft’s downsides, it did so at a price point $100 cheaper. Sony not only didn’t follow Microsoft’s lead, they quickly parodied Microsoft‘s sharing restrictions. My son observed that “13 million views had to sting.”

Microsoft thought people would like this. I’m sure they’ve got all sorts of focus group research that said “we really like your direction.” Maybe they tasked their PR agency with “do a survey with people who will find this strategy palatable.” The sample size was perhaps 17.

Microsoft was planing a “new Coke” scenario. I know this one is really cynical but maybe Microsoft anticipated the reaction and this was done on purpose. This is a strategy Facebook has used in the past. Announce something so over the top that the market reaction will be negative. You can then backpedal, saying “we’ve listened to the voice of the customer.” In this scenario, you assume customers are going to balk on any changes so you purposefully announce something over the top so that when you back up, you’re still ahead of where you were before you made the announcement. I’d consider this a plausible scenario except for the back that Microsoft basically backpedaled to where they were before they made the ill-founded announcement.

You might say “no harm, no foul.” Microsoft backpedaled fast enough that by the time the consoles come on the market, closer to the holiday season, this will all be forgotten. I believe, however, Microsoft has done itself some permanent damage here. If you read your license agreements (and I suggest you do…if you suffer from insomnia”, Microsoft (and typically all vendors) reserve the rights to make unilateral changes in their licensing terms. Bottom line, Microsoft has always had the ability to impose these changes on their users, even post-sale. Nobody worries about these things here because they always think “Microsoft wouldn’t be so stupid as to do something that would slaughter their value proposition.” Well, now you’re thinking “maybe they would.” Sure, they backed off when it became clear they were getting slaughtered but do you think Microsoft has abandoned the approach or merely postponed driving it into their customers? Losing trust in your vendor is a very dangerous position and Microsoft may just have crossed that line. Maybe by beckpedaling they’ve closed ranks with their user base. But I don’t think so. This one will be fun to watch.

Google Glass is in the wild and reviews are beginning to flow in. They range from blogger Robert Scoble’s claim that “I will never live a day of my life from now on without it (or a competitor)” to some pundits already describing it as a failure. Truth be told, I don’t care about Google Glass.

Why not? This used to be what we called a portable computer.

I carried one of these things. It weighed about 26 pounds. It’s one reason I needed rotator cuff surgery on my shoulder a few years ago. Or this.

That’s then-Apple CEO John Sculley proudly holding up a Newton 20 years ago.

If we judged the future of laptops on the basis of this Compaq or the future smartphones and tablets on the basis of the Newton, how stupid would we be looking today? The original Compaq and the Newton could charitably be called “proofs of concept.” Less charitably, they were devices that appealed to the (very) early adopter. (Does it surprise you that I had both of these devices, and even the Compaq’s spiritual predecessor, the Osborne 1. I once got out of jury duty because I had one of these with me in the jury box when it was time to be interviewed.)

This is how I view Google Glass, no pun intended. Note, I have not tried Google Glass and I’ve only talked to one person who has actually used the glasses. (He was underwhelmed.) But I don’t need to. Google Glass is not the present, it’s the future. That future, more broadly, is something called “augmented reality.” Broadly speaking, I think of augmented reality as the blurring of the lines between the physical and the digital. This is already more prevalent than you think. If you’re a sports fan, you’re probably already familiar with the first down line superimposed on the football field. You’re smart enough to know that one isn’t real. But watch a Fox baseball broadcast. That advertising signage behind home plate? The people in the stadium don’t see that one.

Already there are smartphone apps that will display on screen images mixed from the camera and sources on the Internet. For instance, apps I have will point you to the nearest subway stop or will identify restaurants and other points of interest where you’re looking. Six years before introducing the Newton, Apple produced a video called the Knowledge Navigator. It’s a 5:46 tour de force of where technology would head, and still is headed. If you’ve never watched the video, watch it now. Go ahead. I’ll wait.

Now let your imagination run wild. Imagine that kind of software solution with a video projection system that presented relevant information to you in a heads-up display kind of fashion or on your glasses. Or, if we’re looking 20 years out, integrated into your retina or optic nerve. I kid you not. Think of the use cases. You don’t remember a person’s name? That’s a thing of the past. I now have plug-ins for my email that show me the recent tweets or Facebook posts from the mail’s sender. I’d love to have that displayed when I’m actually talking to you. How many times have you been talking about something and gone “what’s the name of that movie?” or “when did Apple introduce that Newton?” Pilots already use heads-up displays so they can get critical information without taking their eyes away from what’s outside. Already there are games for your smartphone that insert geo-located objects into your phone display. And looking at your cell phone while walking is such a risky behavior that there are a variety of solutions to help you do that more safely, from the serious to the frivolous.

So let’s not judge Google Glass as a serious product. I’m not saying I wouldn’t try it. Maybe even like Scoble, I’d never go another day without wearing this. Keep in mind, I’m the guy who five years ago used to wear “projector glasses” on airplanes so I could watch my own movies. Unlike Google Glass, these were big, heavy, wrap around glasses that contained VGA screens. You’d hook it up to your portable media player and watch movies that way. The glasses were sufficiently heavy that if you wanted to watch anything longer than a YouTube video, you basically had to tilt your head backwards at an angle so the glasses wouldn’t slide down. By the end of a movie, I’d be reclined around 45 degrees. Here we are five years after that watching movies on tablets and, very soon, on flexible portable screens.

The use cases for augmented reality are myriad, and compelling. Google Glass won’t be the product that gets us to realize that potential. It may even prove to be the product that gets us to laugh at the potential. But 20 years from now, we’ll laugh at the quaintness of that early effort, 10 years from now we’ll wonder how anyone could ever doubt the category and five years from now, we early adopters will all be embracing various forms of augmented reality. If Apple had done this (and they will some day), people would be tripping over themselves to laud their vision. Google’s track record of “the next big thing” is slightly more tarnished (to say the least), so it’s much easier to ridicule them and dismiss Glass. Don’t. This is our future, and the future is nearer than you think.

I attended an Augmented Reality meetup in New York last week and the line of the night was that augmented reality makes reality a read/write medium. Think about that one.

I have been working with the Stamford Innovation Center to produce a monthly show I call “Pardon My Disruption.” I am a big fan of the ESPN show “Pardon the Interruption” in which two literate sportscasters (no, not an oxymoron but clearly a small universe) banter about and debate the news issues of the day. If you’ve never seen an episode of PTI, you can watch it here. It’s a great format and if you’re interested in sponsoring this for technology in a big way, get in touch with me. I’m really going to see if I can get this done. Until then, I’m taking this tentative first step with the Center’s Marketing Director, Peter Propp. We generally do this live the second Friday of every month at the Innovation Center but with Nemo hitting the region last Friday, we did the session remotely (using Google+ Hangouts). You can enjoy the show at the link which opens this post.

Our subjects this time included:

Meetup.com

Dell goes private

IBM Connect trip report

The New York Times gets hacked: Cybersecurity

Meetup.com

Meetup is one of the best kept secrets of social media. Some of you may remember the blockbuster 1988 business book Megatrendsby John Naisbitt. That was one of the very first business books that captivated me and to this day, I remember Naisbitt promulgating a “high tech/high touch” philosophy. (This wasn’t the dominant theme of the book but is one of the points that sticks with me to this day.) Remember, at this time, technology was nowhere as prevalent in our lives as it is today. At this point, Windows was still a new product, the Mac was still in its infancy and the leading PC manufacturers were Compaq and IBM. Anyhow, Naisbitt’s point was that the more technology invaded our human lives, the more we would have need for a human touch to counter the impersonal nature of computer interactions. Even as we move more interactions to social platforms, email and other technology-based platforms, it would be folly to forget Naisbitt’s forecast. Tweetups — where Twitter users actually get together in a physical location — and Meetup are two of the more obvious manifestations of this phenomenon and bring with them a power that’s not present in virtual-only communities. We’ve seen this with getting Pardon My Disruption off the ground. We tweet about, we Facebook and LinkedIn it, but the largest driver of traffic to the physical event is Meetup. If you haven’t looked at Meetup, you should. Some of my best meetings of a month are Meetup groups (New York Tech Meetup, New York Enterprise Tech Meetup) and I find a fair number of social activities there as well (e.g., the Bucket List Bunch). The New York Tech Meetup is a powerful force in the New York tech community and gathers over 700 people to an NYU auditorium every month. Getting tickets to it is akin to getting tickets to a Springsteen concert on Ticketmaster; you have to keep clicking refresh on your browser and get tickets in the first 10 minutes they’re available or basically they’re sold out. A powerful platform to bring people together physically. How quaint in this virtual world.

Dell

I’ve often chided Google for being a one-trick pony…but it’s a damn good trick. Dell (nee PCs Limited) came up with a great trick 30 years ago — build PCs to order. In the intervening years, even slow-moving behemoths like HP have caught up with that trick and it’s now an industry standard. Meanwhile, Dell has tried to change the story, moving upstream into servers, networking and services. But it has been a slow slog. In today’s next quarter obsessed world, it’s hard to make radical surgery on a company. And make no mistake about it, Dell needs radical surgery. Going private doesn’t solve their problems, by a long stretch. Even as a public company, Dell has, charitably, underperformed in its efforts to remake itself. You just have to scratch your head and wonder how so many tech stalwarts managed to miss the mobile and cloud revolutions. And Microsoft’s involvement in the Dell financing only complicates matters or, more troublingly, sends the message that Dell’s “reinvention” won’t be so different from today’s Dell. And this deal leaves Michael Dell firmly in charge and one has to wonder if he’s the man to lead the reinvention. Dell has largely been off my radar screen for a decade. We’ll see if this move leads to a more disruptive Dell or just incremental, and insufficient, changes.

IBM Connect

I’ve posted recently about IBM Connect and the remake of IBM so I won’t say much here. The only thing I’ll add here is a few thoughts about the impact of its Smarter initiatives internally. While suggesting that the external market may not be precisely aligned with the way IBM is selling its collaborative solutions, there’s no ignoring the fact that the Smarter message has served to focus and align the company internally. It’s almost nauseating how universal IBM people talk about Smarter this or that. It permeates all levels and functions of the organization. One of the challenges of large companies in a fast-moving world is getting all facets of an organization focused on a consistent and aggregated message. IBM’s ability to get the disparate business units aligned around consistent messaging and even more, deep product integration is a truly remarkable accomplishment. If customers start to align with IBM’s messaging, IBM is unassailable. No one can deliver what IBM is delivering. It’s a big if, but as a long-time IBM watcher, a fascinating story to watch unfold.

Security

As much of a technology lover as I am, in my rare dark moments, I have grave concerns about the fragility of the systems we’re building. Quite simply, no one really understands how they all work and so that leaves us vulnerable in some deeply troubling ways. From what can only be called state-sponsored cyberwarfare down to more mundane financial theft, we live in fragile and troubling times. The solution is not simple, complicated by the disgusting politicization of this issue in Washington. I won’t turn this into a political screed but instead in the webcast, we focused on what we as individuals can do. Bottom line: you need better password practices. It used to be that we didn’t want to write our passwords down because the biggest risk was someone sitting down at our computer and stealing things. Now the biggest risk comes from someone who steals your password over the Internet. For those of us who can’t be bothered to have different passwords for different sites, once they’ve got your password, they can harvest it in myriad ways. So, do what I’ve done. Get a password manager — I use Dashlane — and make sure you have strong passwords and different ones for every site. And if you’re concerned about the security of the password vault, and it’s a legitimate concern, write your passwords down…or get used to the “reset password” function of your web sites.

In the legal morass that is Android comes the latest news that Microsoft is suing Barnes & Noble, alleging patent infringement. Think about the surface absurdity of that one. Microsoft suing Barnes & Noble. Even The Onion hasn’t contemplated this scenario. So, what’s really going on here.

At a macro level, here’s what’s happening:

These kinds of patent lawsuits are so common that I’ve almost stopped looking at them altogether. Usually it goes like this:

Someone sues someone else.

The someone else counter-sues.

The two companies exchange patent cross-licensing agreements, usually with one side or the other having to kick in some cash.

There’s a slight twist to the whole Android scenario, again though one that’s not uncommon. Most of these patent lawsuits have focused on Android licensees and not the deep-pocketed Google. It only makes sense to go after the weaker players, albeit ones with sufficient funds to pony up.

What are all these people suing in the Android space trying to accomplish? It’s real simple. If you’re trying to sell an operating system into a market where Google is giving it away, you need to make the OS appear not to be free. In other words, you may not pay for the OS but by the time you factor in legal costs, your free OS all of a sudden isn’t so free. Somewhere along the line, Google is probably going to have to ante up to help its partners by resolving all of these patent infringement issues. It probably means Google’s going to have to write a check. The good news: they’ve got $34.9 billion in cash on hand and are printing more each quarter. So much for the chilling effect on Android licensees.

What’s particularly interesting about the Microsoft/Barnes & Noble case is that presages interesting competition in the tablet marketplace. Why should anyone be worried about Barnes & Noble or, by extension, Amazon? The Barnes & Noble Nook e-reader actually runs on Android. In effect, they’re selling a specialized Android tablet for $249. How can they do that when the rest of the Android tablet marketplace is horribly overpriced as I’ve recently blogged? Welcome to the new world of ecosystems and razors and razor blades. Amazon and Barnes & Noble can sell these devices at low (or no) margin because the economics of incremental margin on the razor blades (books and other digital content) is so compelling and predictable that it pays to seed the market with devices. That’s another reason why Apple, asides from supply chain efficiencies, can sell the iPad so competitively. It can count on a reasonable income stream from the AppStore while in the Android space, those margins go to Google.

Yes, I know that the Nook and the Kindle are not general-purpose tablets. Today. But the color Nook is pretty darn close. The Wall Street Journal’s Brett Arends even recently told readers how to turn their Nooks into tablets. He overstated his case to make a point: Barnes & Noble can do this easily and likely will. If not, they deserve to follow Borders into bankruptcy.

Netting it out:

Google is likely to have to share some of its profits with its ecosystem to cover legal exposures.

Google is likely to have to share some of its app store revenues with partners. Otherwise, the situation with competing app stores (already a fracturing standard) is going to get (much) worse rather than better. They need to do this one quickly.

In other words, Android tablets need to get cheaper and Google will have to share its app and advertising revenues to make that happen.

Players like Barnes & Noble and Amazon can become strong players in the tablet marketplace because they have the economic model and ecosystem to compete with Apple. Selling hardware alone is not much fun these days, and is only going to get worse.

I attended Toy Fair 2011 once again (with my friend and one of the smartest people I know, Larry Smith) which filled New York’s Javits Convention Center last week and it was a journey through quieter times. I was shocked how little cutting-edge technology there was nor tie-ins with mobile devices, cloud services, virtual goods and other ways to extend the reach and impact of traditional “toys.”

I suppose I should have realized things were going to be a little different when I went to pick up my press/analyst badge (for which I had received email confirmation). “No, you don’t qualify,” I was told on-site. Instead, they gave me the badge for financial analysts. I tried to explain the difference between the two but was met with blank, uncaring stares. I was told, however, that my badge would get me pretty much everywhere the press badge did except the press room (and I didn’t really want to spend time there anyhow). In retrospect, it was a great advantage. At times the show floor was pretty barren so if I had a press badge or, even worse, a buyer badge, I’m sure I would have been besieged by booth personnel wanting to tell me about their wares. But with the red badge I was wearing, no one particularly wanted to talk to me. (At least I assume it was the red badge.)

Having immersed myself for the last five years in social, mobile and cloud technologies, I was shocked how little of this there was on the show floor. There were lots and lots of toy blocks, lots and LOTS of stuffed animals (referred to in the trade as “plushes”) but not so many microchips or web connections. I’ve become accustomed at tech trade shows to 90% of the booths having iPads for demonstration purposes; here, it was more like 4% (no exaggeration). It was so low-tech, there were some booths who had old traditional CRTs and not flat-screen TVs. I think the industry is missing HUGE revenue and engagement potential by not only not having toys that contain intelligence but also by not linking them to web sites that add functionality, engagement and further revenue opportunities.

In its story about the show, Time Magazine pulled together an article on the 100 all-“Time” greatest toys. It’s amazing how consistent themes remain over, um, time. Clearly this is an industry that doesn’t like change. Even more, look at what Time picked as the top 10 tech toys they found at the show. They included:

Monopoly Live. I would characterize this as how not to add technology to a classic. Gratuitous technology aimed at “appealing to interrupt-driven kids” does not an improvement make. This approach should die a quick death.

Angry Birds. Yes, if you haven’t had enough of it on your iPad, you can now play the board game. The video game industry understands the concept of “brand extension.” Not so the “traditional” manufacturers.

A “kid-tough” camera. With full-featured adult cameras going for under $100, I’m not sure there’s much of a market here. In fact, I’ll bet most five-year olds can better handle the new generation of touch-screen, feature-rich cameras than can most adults. Maybe they should repackage these as cameras for seniors.

Three things did catch my attention.

The richness of really good scientific experiment kits is wonderful. As a kid growing up, I was pretty much contained to a microscope and slides. Kids today have an amazing array of real science kits focused on timely issues like potable water, renewable energy and the like.

I don’t remember exactly where in Disney World I saw this for the first time but they have this set-up where you wave your arms and motion-detecting devices sense your movement and turn it into music, varying the pitch and speed with how you wave your arms. This has now made itself into home-sized and -priced technology. And at the very low end, you can build your own musical device by just painting a piano.

You’re probably already seen ads for the Parrot AR Drone, a flying device that uses the iPad or iPhone to control it. It makes for great demo though it strikes me as one of those toys where after 10 minutes of using it, you’d get bored. The gimmick may be better than the reality. More broadly, though, you’d think the toy manufacturers more broadly would understand the appeal of (a) the iPhone and (b) a device containing accelerometers. If it’s useful in a phone, surely they can think of ways it would be interesting in a toy. And price is probably not an issue here. The componentry is cheap enough.

All in all, Toy Fair was a wonderful retro journey for me but caused me to reflect on how much of mainstream industry still hasn’t understood the power of technology, now available at incredibly low price points. “Gamification” is a growing trend in technology (“funware,” as my friend Alan Berkson calls it). Technology is embracing games. If games/toys don’t embrace technology, there stands to be another industry where the technologists take over and the traditional players get shunted aside. To their credit, the largest players in the toy industry (e.g., Mattel) seem to be the most advanced with technology. That’s perhaps not as I’d expect it. The disruptors should be driving the trend. Maybe it’s because of the tech savvy required, or the capital investments. For whatever reason, though, this is a space likely to see a lot of change in the next few years. Here come the technologists.

If you know me, you’re not surprised to learn that I’ve been practically a life-long fan of Jeopardy. That’s why when I got an invitation from IBM to watch last night’s final episode of the Watson vs. Ken Jennings vs. Brad Rutter match along with IBM’s Dr. David Ferrucci, the Principal Investigator behind Watson, I jumped at the opportunity. I was not disappointed. It was an exciting evening and the opportunity to chat with Ferrucci was memorable.

I’m always hesitant to write things in the afterglow of a moment like this because certainly emotion gets the better of me. I can’t help but think, however, that we will look back on this moment as a defining moment. In a brief conversation with eWeek‘s outstanding enterprise reporter, Darryl Taft, I talked about this accomplishment in lofty terms. I likened it to President Kennedy’s establishing a landing on the moon by the end of the decade of the 60’s as a national priority. I was about to write “this one isn’t quite that significant”…but maybe it is.

What did I mean by that comparison? Well, setting a moon landing as the target accomplished two things:

It set a target, unifying disparate research and development efforts towards a single common goal.

It set a deadline, giving some urgency to what might otherwise have been “leisurely” scientific endeavors.

So too did winning Jeopardy create those two conditions for the team of IBM researchers who spent four years preparing for this moment. Without Jeopardy, these advances may never have come together, at least not in this time frame. For those who think this a frivolous activity, I’d note two things:

Competing at Jeopardy is certainly a tremendous challenge for natural language processing. If you can win at Jeopardy, many other commercial applications are feasible.

IBM, sensitive to this charge, today announced an initiative whereby they’ll explore options to apply the Watson technology in the healthcare space.

So what do we make of this?

Certainly IBM gets a massive PR boost. Winning as it did a decade ago with Deep Blue at a chess championship is interesting. However, the last time Americans cared about chess was when Bobby Fischer was world champion. (I was a young kid. A long time ago.) Jeopardy, however, is a cultural icon and also a great fit for IBM’s target audience. It would have been one thing to win at Wheel of Fortune (easy challenge, easy competition), another thing to win at Jeopardy (harder challenge, Ken Jennings; UPDATE interview with Jennings here).

More important, perhaps, for IBM, this validates some decisions it made years ago. Remember when they sold the PC division to Lenovo? “How could you get out of the PC business, IBM? It’s the future,” people cried. Instead, IBM quietly doubled down on cloud computing and big data (although we didn’t call it those things back then). Looking pretty prescient today, aren’t they?

Now, a lot of this stuff isn’t really commercially viable just yet. IBM threw a lot of hardware at this problem. 10 racks of servers, 15 terabytes of RAM, 2,880 processor cores operating at 80 teraflops. But you’ve got to love Moore’s Law. This will be mainstream computing in 5-10 years. It will be on your phone in 15. Pretty exciting stuff.

A few other random observations after my conversation with Ferrucci:

Certainly Watson had some advantage in terms of access to information, but the humans had an incredible breadth as well. One of Watson’s big advantages was not in the information but actually in the time to assess whether it should hazard a guess based on a significant statistical analysis involving competitive position, confidence of answer, how much time was left, etc. Watson was just a better game player. That’s why Ken Jennings was so visibly frustrated. Watson made decisions faster.

Watson was a shrewd wagerer. Based on their analysis of Jeopardy games, the IBM researchers concluded that most players didn’t wager enough on daily doubles. Watson was an aggressive wagerer early in games when presented the opportunity.

Category names were for the most part not very helpful to Watson. Tying those things back to answers was so nuanced as to be often not valuable.

As IBM added some information sources to Watson, results didn’t markedly improve and so they were removed to conserve capacity. Wikipedia, despite widespread concern about its unreliability, was a highly regarded source, comparable to “traditional” encyclopedias.

Personally, it was an exciting evening. I was actually rooting for the humans to win. The fact that they did not, though, is hopefully exciting for our ability to apply computing power to important, valuable tasks that will benefit us all. Maybe that will be the lasting legacy of the three nights: it caused us to focus on new vistas for computing benefits and ask some interesting questions about how we might take that next quantum leap.

With the news that Steve Jobs is taking another medical leave from Apple — his third — it’s legitimate to ask the question of just how essential he is to Apple’s success. This is going to be a quick post, because I think the truth of the matter is that there are probably only 20 people who can answer that question…and they’re so secretive and such a part of the Jobsian communications strategy that we’re not likely to know the answer to that question for another year or more.

By all accounts, COO Tim Cook is a buttoned-down manager. Apple has been AMR Research’s (now Gartner’s) #1 in its Supply Chain Top 25 for three years in a row. Thus, I think it’s safe to say that Apple’s ability to execute its plan is in safe hands. Cook has probably been running large amounts of the operational show for years anyhow. How much it has helped him to have Jobs’s notoriously strong hammer can be asked, but ultimately this is not where Apple’s potential issues lie.

More to be questioned is how much of the marketing power of Apple is attributable to the “Jobsian reality field” and how much of the product vision is directly attributable to Jobs. Jobs has indicated that he’s going to remain engaged as CEO and assuming there’s some veracity to that assertion, it’s reasonable to assume that his exquisite sense of product development will continue to guide the company. With the Verizon announcement, the iPhone momentum continues even while Android continues to make inroads in the smartphone marketplace. Apple’s business plan never was to be the volume leader so this marketplace condition was to be expected. The same will probably happen in the tablet marketplace; Apple is quite happy to be the pioneer and then to reap early-mover profits while moving gracefully into the premium price place of the market. But given that, the question becomes “what’s next?” Apple has introduced two category-creating, or at least redefining, products in a row. They probably need another home run in the next two years to sustain their momentum and lofty market perceptions. Without Jobs at the plate, you’d have to question Apple’s ability, or at least likelihood, of hitting another home run.

This concern extends to Apple’s marketing as well. Again, they do a remarkable job, second to none certainly in the technology space , and even the broader consumer space. Here’s where it gets hard to call. Jobs doesn’t have to be omnipresent to sustain the Jobsian magic. In fact, lesser Jobs could actually mean more impact when he’s around. On the other hand, if he becomes perceived as merely a figurehead disassociated from the company he used to rule with an iron fist, his magic could be compromised.

Apple more than most companies is a cult of personality and the extended absence of its leader is a challenge for the company. That said, I don’t think it’s an insurmountable challenge. Microsoft was able to transition from a “cult of Bill Gates” to something more nuanced. But that was much easier because the cult of Bill was vastly weaker than the cult of Steve and the truth of a Bill-ruled company was less than the truth of a Steve-ruled company. I think we’re nearing the time when for myriad reasons Apple is going to need to let Jobs sprinkle some pixie dust on someone else, a visionary who can sustain the momentum and help transition the cult of Steve back once again to the cult of Apple. This mingling of Jobs and Apple is a relatively recent phenomenon. While a search of Time Magazine’s web site and Google couldn’t help me locate the quote, I have vivid recollections of a late 80’s/early 90’s quote there which said “second perhaps only to Harley Davidson is an Apple user’s love of their computer and the company who makes it.” The Jobs worship started with his return to the company who ousted him and with each successive product success, it grew only larger. It’s imperative now for Apple to share the spotlight, to bring a new person to the forefront as well as transition that passion back to the company so that it transcend’s Jobs, whatever his health.

So, back to the question that started my musings. I think Steve Jobs is as important to Apple’s success as any one individual has ever been to any technology company. Any extended absence by him could prove to be damaging to Apple’s future products and prospects. It sounds like there’s time for Apple and Jobs to transition that passion back more heavily to the company so that it can thrive in the inevitable absence of Jobs, whether it be this health-related matter, his waning interest or any other thing in life that could lead to his moving on/out.

He’ll be a tough act to follow, no doubt…but not impossible. Back in the late 80’s, I actually had Steve Jobs as the luncheon speaker at a Gartner PC conference I was running. This was right after he had introduced the NeXT computer, an amazing piece of software engineering that stood to transform the way we created and used software. He had demonstrated it weeks earlier at Gartner’s offices in Stamford, after which none other than Gideon Gartner came to me and said “do you think we should standardize our company on these?” The demonstration was that compelling. I, being a noted curmudgeon, said “give me a night to think on it,” after which I came up with any number of good reasons why it wasn’t the right thing to do. At the conference, Steve did his thing, and it was amazing. You could hear jaws dropping in the audience. I don’t know how many of you have ever given a meal speech but let me tell you, it’s the hardest thing in the world. Within three minutes, all you hear is silverware clanking and the din of conversation at the tables gets louder and louder. Not this time. Jobs had their rapt attention. You could have heard a pin drop. At the end, thunderous applause. Well, I was the next speaker. Now what do I do? How do you follow God and the 10 Commandments? All I was talking about was operating system futures. So I asked the audience, “how many of you want one of those things right now?” Every hand in the room went up. Then I said “how many of you are ready to standardize your company on those things tomorrow?” Every hand went down. (Well, I’m pretty sure Gideon wasn’t in the audience.) I then said “so now let’s focus on what our real options might be.”

So you can follow Steve Jobs. I’m just glad that I don’t have to do it again.